By TIOL News Service

NEW DELHI, FEB 15, 2021: THE Income Tax has detected unaccounted transaction of around Rs 1,500 crore during search and survey operations on a Mumbai-based group involved in producing gutkha, pan masala and hospitality operations, said the Finance Ministry on Monday.

The search and seizure actions were carried out by the tax officials from February 8-13 across several locations in India, leading to the detection of foreign assets lying with a company registered in tax-haven British Virgin Islands with an office in Dubai and controlled and managed by the chairman of the group.

"The net worth of the British Virgin Islands company is Rs. 830 crore created by siphoning of funds from India," said the officials. They added that funds were then routed back to India as share premium amounting to Rs. 638 crore in the flagship companies of the group.

During the search action, various digital evidences and forensic analysis have yielded email communication, establishing control and management of the company with a promoted and leading to a shareholding employee who was also cross-examined.

"It has been accepted by the parties involved that the employee was not aware about being a shareholder in the company and he had signed papers on the instruction of the main promoter," revealed the I-T sleuths.

Further, it has been found that the group has availed bogus deduction of taxes worth Rs. 398 crore by setting up two entities in Himachal Pradesh for sham transactions.

Additionally, the unaccounted production of Rs. 247-crore worth of pan masala and false income tax deductions amounting to Rs. 63 crore were also reported.

During the search action, Rs. 13 lakh in cash was seized along with Rs. 7 crore worth of jewellery. Prohibitory orders have also been placed on 16 lockers and in 11 premises.

Thus, the search action has led to detection of unaccounted transactions of around Rs. 1500 crore, so far, with investigations still underway.